Updated 8 September 2026
Fringe benefits tax for the year ending 31 March 2027. Note the year: FBT runs 1 April to 31 March, not 1 July to 30 June. That mismatch is the single most common mistake.
Cost price including GST and dealer delivery, excluding registration and stamp duty.
Type follows the GST treatment of the benefit, not what it is called.
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FBT is paid by the employer, not the employee, and it is deliberately set so the employer is no better off providing a benefit than paying salary. Three steps: work out the taxable value of the benefit, gross it up, then apply 47%.
The FBT year runs 1 April to 31 March, not the income year, which is the first thing to get straight. The year now running ends 31 March 2027 and the return is due after it closes.
Worked example. An $8,000 benefit where the employer can claim the GST credit is a Type 1 benefit. Grossed up at 2.0802 it becomes $16,642. FBT at 47% is $7,822. On an $8,000 benefit that is close to the same cost as paying the money as salary to someone on the top rate, which is the point of the design.
The gross-up puts the benefit back on a pre-tax footing so the employer's cost matches the cost of paying salary. Where the employer is entitled to a GST credit on the benefit, the gross-up also has to unwind that credit, which is why Type 1 is higher.
| Type | When it applies | Gross-up |
|---|---|---|
| Type 1 | Employer entitled to a GST credit on the benefit | 2.0802 |
| Type 2 | No GST credit, including GST free and input taxed supplies | 1.8868 |
Getting this wrong moves the liability by about 10%. Common Type 2 items that get misclassified as Type 1: residential rent, most financial supplies, and anything bought from a supplier who is not registered for GST.
Car benefits are the largest FBT item for most small employers, and there are two methods.
The statutory formula takes 20% of the car's base value, reduced for days the car was not available for private use and for any employee contribution. It needs no log book, which is why most employers use it.
The operating cost method takes the actual running costs, including deemed depreciation and interest, and applies the private use percentage from a valid log book. It usually wins where business use is genuinely high, and it is worthless without the log book.
A log book is valid for five years, but only if the pattern of use has not materially changed. A log book kept when the vehicle was doing site visits does not support the same percentage after the role changed to office based. This is a standard review question.
Where an employee's benefits exceed $2,000 of taxable value in the FBT year, the grossed-up amount is reported on their income statement. It is not taxed again in their hands, but it counts for Division 293, HELP repayments, the Medicare levy surcharge, private health rebate and family assistance. Employees are routinely surprised by this and it is worth telling them before the statement lands.
If your prior year FBT liability was $3,000 or more, you pay by quarterly instalments through the activity statement rather than in one hit.
The benefits that generate amended assessments are rarely the company car. They are the ones nobody treated as a benefit at all.
Entertainment. Client and staff meals, functions and hospitality. The treatment differs depending on the method elected and whether the person entertained is an employee or a client, and the GST and income tax deductibility follow the FBT treatment rather than the other way round.
Employee expense payments. Paying an employee's private bill, or reimbursing it, is a fringe benefit even when it runs through the general ledger as a normal expense. School fees, private health cover and personal travel are the usual ones.
Car parking. Where the tests are met this is a benefit, and the small business exemption is narrower than most people assume.
The safest approach is a scan of the ledger before 31 March rather than after, because most of these are fixable in advance with an employee contribution and none of them are fixable afterwards.
Rates used, FBT year ending 31 March 2027: FBT rate 47%, Type 1 gross-up 2.0802, Type 2 gross-up 1.8868, statutory formula 20% of base value, reportable fringe benefits threshold $2,000 of taxable value, quarterly instalment trigger $3,000 of prior year liability. Verified 8 September 2026 against the ATO.
Most FBT exposure we find is not the car. It is entertainment and expense payments that were coded as ordinary business costs and never tested. A scan before 31 March is worth far more than a return prepared after it.
Take the taxable value of the benefit, gross it up by 2.0802 if the employer can claim a GST credit on it or 1.8868 if not, then apply 47%. An $8,000 Type 1 benefit grosses up to $16,642 and attracts $7,822 of FBT.
47%, unchanged. The gross-up factors are 2.0802 for Type 1 and 1.8868 for Type 2, also unchanged. The FBT rate is aligned with the top marginal rate plus the Medicare levy, which is why it has held at 47% for several years.
There is no cap on FBT itself. The $2,000 figure people are thinking of is the reportable fringe benefits threshold: above $2,000 of taxable value for an employee, the grossed-up amount appears on their income statement. Certain not-for-profit employers do have capped concessions, but ordinary businesses do not.
Yes, dollar for dollar against the taxable value, and it is the most reliable lever available. The contribution has to be genuinely paid, usually from after-tax money, and it has to be recorded. A journal entry to a loan account after year end is not the same thing as a payment and is the version that fails on review.
If your liability is nil you generally do not have to lodge, but you should tell the ATO you are not lodging so the obligation is not left open. Where benefits were provided and reduced to nil by employee contributions, keeping the working is what supports the position later.
The FBT year ends 31 March. The return and payment are due 21 May, or later if you lodge through a registered tax agent using the agent lodgment program. Employee contributions must be made by 31 March to count for that year.
General information only, prepared without regard to your objectives, financial situation or needs. It is not financial product or taxation advice and should not be relied on as such. Liability limited by a scheme approved under Professional Standards Legislation.
